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Penalties And Interest On Taxes

Penalties and interest on taxes

  • One of the ways to plan your taxes in advance to avoid penalties and interest is to do a tax planning session in November/December
  • Make sure you submit the full payment by the extended deadline. Expect a notice from the IRS if the payment doesn’t include the penalties and interest amount.
  • Make sure you’re getting all the deductions that you possibly could need or use to reduce your tax bill, so that you don’t owe any more taxes in April or October.

Hey everyone. We’re going to talk about penalties and interest, again. If you owed money to the government, that money was actually due back in April. In case you had filed an extension, the extended October 15th deadline is round the corner. Back in April you submitted how much in tax you thought you were going to owe, assuming that you made the correct estimate. There should be, hopefully, no more taxes due now in October.

However, if there was a change or if something else came up and now you do owe additional taxes, those additional taxes were technically due back to the IRS in April. There is going to be some penalties and interest for underpayment of the tax. The IRS can calculate that, or if you’re working with a CPA, they can help you calculate those taxes, penalties, and interest on the taxes that are due. Make sure you submit the full payment by the extended deadline. Expect a notice from IRS if the payment doesn’t include the penalties and interest amount.

One of the ways to plan your taxes in advance to avoid penalties and interest is to do a tax planning session in November/December. You can increase the withholding or the estimated payments that you’ve been making quarterly. The other way to do it is to create a strategic tax coaching plan. Make sure you’re getting all the deductions that you possibly could need or use to reduce your tax bill so that you don’t owe any more taxes in April or October.

 

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PLEASE NOTE: As of late Aug 2018 there was a proposed law change that would disallow a double deduction for these charitable credits at the federal level for contributions made after Aug 2018. You are still eligible for the AZ state tax credits as the change would only impact your ability to take them as charity donations at the federal level.
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